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10 August 2016

European Commission Report Recommends ‘Ship Recycling License’

A new report by the European Commission
recommends the introduction of a ship recycling license for all ships calling
at EU ports as a form of financial incentive aimed at preventing the practice
of re-flagging end-of-life vessels so that they can be disposed of at
substandard shipbreaking yards.

The recommendation was quickly rejected by
the European Community Shipowners Association (ECSA) and the International
Chamber of Shipping, which claim the license would undermine efforts by the
International Maritime Organization (IMO) to improve working and environmental
conditions in developing nations, where most ship recycling yards are
located.

The report was written by Ecorys,
classification society DNV-GL and the Erasmus University School of Law and
published Wednesday.

Under the model recommended, a ship recycling
license would serve as the basis for the accumulation of capital over the
operating life of a ship, with the aim of covering the revenue gap between
using substandard versus sustainable ship recycling facilities for end of life
ships. In other words, the capital amount accumulated during the operational
life of each vessel would be set aside in an EU fund and only paid back to the
last owner of the vessel as a premium if the ship is recycled in a sustainable
facility approved by the EU.

The 2013 EU Ship Recycling Regulation
requires all vessels sailing under an EU flag to use an EU list of approved
ship recycling facilities. However, NGOs argue that a major shortcoming of the
regulation is that shipowners can circumvent the law by re-flagging a vessel to
a non-EU flag, i.e. flag of convenience, in order to sell the vessels to a
substandard yards in South Asia that are otherwise banned under the law.

The mechanism recommended in the Commission’s
report would be connected to the ship rather than its owner, in order to allow
ownership changes during its operating life.

“EU shipping companies should not circumvent
EU environmental laws and not utilise practices that would never be allowed in
Europe. EU flag-neutral measures which apply equally to all ships calling at EU
ports are necessary to increase environmental protection” says Sotiris Raptis,
shipping and aviation officer at Transport and Environment.

An important thing to note is that the report
was simply published by the European Commission and does not necessarily
reflect the opinion of the Commission.

“We call on the European Commission to
follow-up this report with a legislative proposal,” says Stephane Arditi,
Products & Waste Policy Manager of the European Environmental Bureau. “The
effective implementation of European environmental policies has been dependent
on making the ‘polluter pay’. If the EU is serious about its commitment to
sustainable ship recycling, all ship owners trading in Europe need to be held
financially liable.”

But shipowners don’t see it that way and
remain committed to the implementation of the IMO Hong Kong Convention.

“As well as being unduly complex, widely
impractical and very difficult for the EU to administer, the establishment of
such a Fund will be an affront to the international community which has adopted
the Hong Kong Convention on ship recycling, whose standards have already been
incorporated into a similar EU Regulation” said ECSA Secretary General, Patrick
Verhoeven.

ICS Secretary General, Peter Hinchliffe added
“Such a draconian unilateral measure, especially if applied to non-EU ships, is
likely to be seen by EU trading partners as anti-competitive interference into
the conduct of international shipping.
There is a real danger that other nations would apply retaliatory
measures.”